PLASTICS manufacturer Victrex is at the cutting edge of polymers and said yesterday that trading during January has been much stronger than expected, sending shares surging more than 10pc.

“We have made an encouraging start to 2014, with first-quarter performance ahead of the prior year and continuing our momentum from the second half of 2013,” said chairman Anita Frew.

The polymer specialist said sales increased by 6pc to 679 tonnes during the three months to the end of December, compared with the same period last year.The company said the second quarter started strongly with January’s sales hitting 330 tonnes.

David Hummel, chief executive, told Questor that the driving force behind the sales growth was a strong market in the automotive and aerospace sectors for the company’s Peek products, which are made from a new lightweight polymer developed by Victrex which is also temperature and chemical resistant. The Peek material is being used to replace metal parts in aeroplanes such as the new Boeing 787, brake pads in cars, and components in smartphones and medical implants.

The FTSE 250-listed company is embarking on the largest expansion in its history by doubling investment in Peek manufacturing facilities. Capital investment rose to £40.7m from £27m last year, with Victrex building a third Peek manufacturing plant that it says will underpin growth in the future.

The specialist plastics group was hit by a sharp slowdown in electronics last year. Sales of electronics products fell 12pc to 628 tonnes for the full year ended September 30.

However, this was offset by improved demand for lightweight brake pads on new fuel-efficient cars and aircraft in the second half. Overall sales improved by 10pc in the second half, bringing full-year sales to 2,920 tonnes.

Mr Hummel said that it was still a little too early to lift guidance for the full year as the company only has a forward order book of about one month which provides little visibility on future revenues.

Market consensus is for revenue of £236m, pre-tax profits of £100m, giving earnings per share of 92p in the year ahead. Victrex shares trade on a forecast earnings multiple of 19 times, and they offer a forecast dividend yield of 2.5pc. However, take out about £92m in cash reported at the full year, or 109p per share, and the multiple falls to 18 times. The shares go ex-dividend today and this remains an excellent company. Hold.